FISHERY BULLETIN: VOL. 87, NO. 2, 1989 



sablefish harvested by fixed gears is exported to 

 Japan so that these markets are integrated by com- 

 modity flow on at least a limited scale (but not by 

 price), the low export volume suggests that the 

 Pacific coast producers' export strategy has not 

 aimed at capturing an important market share or 

 establishing a dominant position in the Japanese 

 market. Rather, relatively small-scale U.S. pro- 

 ducers are more likely to be simply concentrating 

 on maximizing their net returns in any given time 

 period. Moreover, policy actions and shifting market 

 conditions in one country are unlikely to affect the 

 other. 



The Tokyo central wholesale and Alaska fixed 

 gear ex-vessel markets are well integrated by prices 

 in the sense of a long-run tendency in the short- 

 run adjustment process. That is, over a period 

 longer than one month, changes in Alaska prices 

 can be attributed to changes in Tokyo prices and 

 past spatial price differentials between the two 

 markets. 



Tokyo and Alaska markets are not fully inte- 

 grated in the short-run, so that a price change in 

 the Tokyo market is not fully and immediately 

 passed on to the Alaska market within one month. 

 Yet, a form of short-run price integration exists. 

 Alaska market responses to rising Tokyo prices do 

 not differ from responses to declining prices, that 

 is, price responses are symmetric. The peak price 

 response in the Alaska market appears to occur by 

 the end of the third month and the impact of a Tokyo 

 price change appears to die out after the fourth 

 month. 



Policy actions or shifting market conditions in 

 Japan will reverberate throughout the Alaska fixed 

 gear ex-vessel sablefish market but not in the Pacific 

 coast fixed gear ex-vessel sablefish market. Should 

 the Alaska fleet continue to orient its harvesting ac- 

 tivities toward supplying the Japanese export mar- 

 ket, it must contend with the consequent increased 

 vulnerability to any trade, import, and fishing 

 policies implemented by Japan as well as changes 

 in Japanese consumer tastes and preferences. For 

 example, Japanese policy makers might feel that 

 sablefish imports threaten the well-being of Japa- 

 nese producers domestically culturing or harvest- 

 ing fish. In this case, because Alaska ex-vessel 

 markets respond to Japanese price changes, a tariff 

 on imported sablefish from Alaska would reduce the 

 price received by the Alaska producers within four 

 months. In turn, changes in Alaska's harvesting pat- 

 terns would follow sometime thereafter. Alterna- 

 tively, a Japanese import quota on sablefish would 

 directly restrict the commodity flow from Alaska but 



not indirectly as vdth a tariff, which signals through 

 the price mechanism. In contrast, because Pacific 

 coast harvesters do not respond to the information 

 conveyed by Tokyo prices, a Japanese import tariff 

 would be ineffective because it would not impact any 

 commodity flow. Thus, import quotas would be the 

 most effective Japanese policy option to insure that 

 commodity flows are restricted. 



U.S. Alaska sablefish policies should be formulated 

 with an eye on the market integration of the fixed 

 gear fleet with the Tokyo market. U.S. policy inten- 

 tions could be either amplified or dampened, depend- 

 ing upon the situation, creating unintended and 

 perhaps even surprising consequences. For exam- 

 ple, U.S. concern over depleting the Alaska's sable- 

 fish resource could lead to trip quotas and even con- 

 tentious gear allocation issues. Yet, if Tokyo prices 

 dramatically rise because of a subsequent restricted 

 Alaska export flow, Alaska harvesters will receive 

 strong market signals to increase sablefish harvests, 

 thereby generating further pressure on the sable- 

 fish resource and aggrevating the issues of discards 

 and gear conflicts.^ Alternatively, if U.S. limitations 

 on sablefish harvests are coupled with say a shift 

 in Japanese consumers' tastes and preferences away 

 from sablefish, leading to a pronounced decline in 

 relative sablefish prices, Alaska producers might 

 respond to these price signals by cutting sablefish 

 production back below the harvest guidelines— 

 thereby obviating the very need of these restric- 

 tions. In contrast, if the price linkages present from 

 1981 to 1986 continue, U.S. Pacific coast sablefish 

 regulations can be formulated without regard to the 

 possible effects upon U.S. production of trends and 

 shifts in the Japanese market or Japanese govern- 

 ment policies. 



Finally, another form of vulnerability facing U.S. 

 harvesters involves a trade parameter under less 

 direct policy control: changes in the currency ex- 

 change rate between Japan and the United States. 

 All prices used in this analysis are converted to U.S. 

 dollars so that fluctuations in the exchange rate will 

 tend to move prices of a traded good in opposite 

 directions within the producing and consuming coun- 

 tries. Price movements observed in the United 

 States and Japan from 1985 to 1987 illustrate the 

 effect of a rapid 40% reduction in the exchange rate. 

 As one indication of increased Japanese purchasing 

 power, real Tokyo wholesale prices for sablefish fell 



'The price of Pacific coast sablefish are also likely to bid up under 

 this scenario. Through provision of price incentives, the Japanese 

 will encourage methods of harvest, dress, and storage which pro- 

 vide a product suited to their markets (as long as the Japanese 

 hold such a commanding price position in the market). 



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